Workers Compensation
In one sentence
Insurance that provides medical benefits and wage replacement to employees injured during work.
Plain English
Workers compensation is a form of insurance that employers are required to carry to protect employees who are injured or become ill as a result of their job. When an employee is hurt at work, workers compensation covers medical expenses, rehabilitation costs, and a portion of lost wages while the employee recovers. In exchange, the employee generally gives up the right to sue the employer for the injury. The system is designed to provide quick, predictable benefits without the need for a lawsuit. Benefits vary by state and depend on the severity of the injury.
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Example
A construction worker falls from a scaffold and breaks his leg. He files a workers compensation claim, which covers his surgery, physical therapy, and 60 percent of his wages for the three months he cannot work. He does not sue his employer because workers compensation is the exclusive remedy.
Used in a sentence
“The injured employee received workers compensation benefits to cover her medical treatment and lost income during recovery.”
How Workers Compensation differs by state
Workers Compensation can apply differently depending on the state. Click a state to see local specifics.
Alabama
Alabama allows employers to opt out of workers' compensation insurance entirely, making coverage voluntary rather than mandatory.
Alaska
Alaska requires most employers to carry workers' compensation insurance, with coverage beginning immediately upon hire.
Arizona
Arizona requires workers' compensation insurance for most employers and sets strict notice deadlines for injured workers to report injuries.
Arkansas
Arkansas requires workers' compensation coverage for employers with three or more employees, with a lower threshold than many states.
California
California requires all employers to carry workers' compensation insurance and imposes strict liability on employers for workplace injuries regardless of fault.
Colorado
Colorado requires employers to carry workers' compensation insurance or qualify as self-insured; employees must report injuries within 30 days.
Connecticut
Connecticut mandates workers' compensation insurance for all employers with one or more employees; injured workers must file claims within two years.
Delaware
Delaware requires employers with one or more employees to carry workers' compensation; employees must report injuries within 30 days of occurrence.
Florida
Florida requires most employers to carry workers' compensation; employees must report injuries within 30 days and file claims within two years.
Georgia
Georgia requires employers with three or more employees to carry workers' compensation; injured workers must report injuries promptly and file claims within one year.
Hawaii
Hawaii requires all employers to carry workers' compensation insurance; employees cannot waive coverage.
Idaho
Idaho allows employers to self-insure or purchase coverage; independent contractors are generally excluded unless they elect coverage.
Illinois
Illinois mandates workers' compensation for most employers; benefits include medical care, wage loss, and permanent disability compensation.
Indiana
Indiana requires workers' compensation insurance for most employers; the state operates a monopoly fund alongside private insurers.
Iowa
Iowa requires all employers to carry workers' compensation; the state fund is the exclusive provider for most employers.
Kansas
Kansas requires most employers to carry workers' compensation insurance or qualify as self-insured.
Kentucky
Kentucky employers must carry workers' compensation insurance; injured workers have limited ability to sue employers.
Louisiana
Louisiana's workers' compensation system is unique; most private employers are exempt and self-insure through state fund.
Maine
Maine requires employers to carry workers' compensation insurance; the state fund is the primary insurer.
Maryland
Maryland requires most employers to carry workers' compensation; the state fund competes with private insurers.
Massachusetts
Massachusetts requires most employers to carry workers' compensation insurance; employees cannot sue employers for work injuries.
Michigan
Michigan's no-fault system covers all work-related injuries; employees receive unlimited medical benefits and wage loss replacement.
Minnesota
Minnesota requires most employers to carry workers' compensation; benefits include medical coverage and wage replacement up to statutory limits.
Mississippi
Mississippi requires most employers to carry workers' compensation; coverage is mandatory for employers with five or more employees.
Missouri
Missouri allows employers to self-insure or purchase workers' compensation coverage; coverage is mandatory for most employers.
Montana
Montana requires most employers to carry workers' compensation insurance or qualify as self-insured.
Nebraska
Nebraska employers with three or more employees must carry workers' compensation insurance or self-insure.
Nevada
Nevada requires employers with one or more employees to carry workers' compensation insurance or self-insure.
New Hampshire
New Hampshire requires most employers to carry workers' compensation insurance, but allows some self-insurance.
New Jersey
New Jersey requires all employers with one or more employees to carry workers' compensation insurance.
New Mexico
New Mexico requires most employers to carry workers' compensation insurance or qualify as self-insured.
New York
New York mandates workers' compensation for most employers and provides generous wage-replacement benefits.
North Carolina
North Carolina makes workers' compensation optional for most private employers but mandatory for construction companies.
North Dakota
North Dakota requires most employers to carry workers' compensation through the state fund or approved private insurers.
Ohio
Ohio operates a state-administered workers' compensation system through the Ohio Bureau of Workers' Compensation.
Oklahoma
Oklahoma requires most employers to carry workers' compensation insurance or qualify as self-insured.
Oregon
Oregon operates a state-run workers' compensation system where most employers must insure through the state fund.
Pennsylvania
Pennsylvania requires most employers to carry workers' compensation insurance through private insurers or self-insurance.
Rhode Island
Rhode Island requires employers to carry workers' compensation insurance through the state fund or approved private insurers.
South Carolina
South Carolina requires most employers to carry workers' compensation insurance or qualify as self-insured.
South Dakota
South Dakota requires most employers to carry workers' compensation insurance or qualify for self-insurance.
Tennessee
Tennessee mandates workers' compensation for most employers but allows some private employers to opt out under strict conditions.
Texas
Texas makes workers' compensation optional for most private employers, creating a unique non-subscriber system.
Utah
Utah requires most employers to carry workers' compensation insurance through the state fund or private insurers.
Vermont
Vermont requires all employers with one or more employee to maintain workers' compensation insurance coverage.
Virginia
Virginia allows employers to self-insure or purchase coverage; employees must report injuries within 30 days to preserve claims.
Washington
Washington operates a state-run monopoly system; all employers must participate, and workers cannot sue employers for negligence.
West Virginia
West Virginia requires most employers to carry coverage; uninsured employers face significant penalties and employee claims shift to the state fund.
Wisconsin
Wisconsin requires employer-provided coverage; the state fund and private insurers compete, and injured workers receive two-thirds wage replacement.
Wyoming
Wyoming requires employer coverage through the state fund; workers cannot sue employers, and benefits are calculated as a percentage of average weekly wages.
District of Columbia
DC requires employers to carry workers' compensation insurance and covers most private and public employees with no waiting period for benefits.
Related terms
Negligence
Failure to exercise reasonable care that results in harm to another person.
Damages
Money awarded by a court to compensate a party for losses caused by a breach or wrongdoing.
Breach of Contract
Failure to do what a contract requires, without a valid legal excuse.
Right to Work
A legal principle that employees cannot be forced to join a union or pay union fees as a job condition.
At-Will Employment
An employment relationship where either party can end the job at any time without cause or notice.
Wrongful Termination
Illegal firing of an employee in violation of law, contract, or public policy.
Non-Compete Agreement
A contract clause restricting an employee from working for competitors or starting a competing business after leaving.
Minimum Wage
The lowest hourly wage an employer is legally required to pay employees.
This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.